New Asciano boss may sell off ports

Asciano’s new chief executive, John Mullen, has made it clear that he is open to selling under-performing assets, such as its container ports operation, if they fail to improve, reported The Age.


The ports and rail operator this week dumped its founding boss, Mark Rowsthorn, after almost four years at the helm. It has sparked speculation that the appointment of Mullen, the former chief of DHL Express, who takes the reins on Monday, could result in a break-up of Asciano.


Analysts have interpreted Mullen's appointment as a sign that Asciano's board wants to increase the focus on return on capital for all its operations.


Mullen said yesterday that he was "very conscious" of investors questioning whether Asciano should sell the container ports business or other assets.


"That is a logical question and that is something we have to work through," he said. "If we can get every piece of the business performing to a proper level of return, then you would retain those assets. If you can't, management would be recommending to the board that you do something else with them."


Merrill Lynch analysts have calculated that Asciano's coal haulage and intermodal businesses offer the best returns on invested capital, at nine per cent and 11 per cent respectively.
In contrast, the container port division's return is six per cent and there are concerns it could worsen because of competition from Hutchison Ports.


The analysts said the sale of the container ports business would raise Asciano's share price. But they emphasised that finding a buyer could prove difficult because of its low returns on invested capital.


Mullen said that while his immediate focus would be on improving the ports business, "we shouldn't be sentimental in the long run if that or any other element doesn't deliver the returns it should".


"Overall, we need to lift the whole return of the company to somewhere that puts us in the top half or the top quartile of similar-type companies," he said.


Emphasising that he was a "team player", Mullen also sought to allay fears among Asciano's workforce that he would wield the axe after taking the reins. It has been speculated that those executives closely associated to Rowsthorn could leave Asciano.


Mullen, an Australian who has spent almost all his working life in the transport industry, was chief executive of DHL Express from 2006 to 2009. Before that he was boss of DHL Express's Asia-Pacific operations and also held senior positions at TNT Group for a decade.


His new role will mean that he will step down from the boards of Brambles and MAp Airports, but will remain a director of Telstra.
(Source:http://www.cargonewsasia.com)